Buying A Home

New Home Purchase

There are some important qualifications to becoming a new home owner:

• A steady reliable source of income
• Employed at least 2 years
• Paying your bills on time

• Being able to make the payment of a new home mortgage along with other debts you have
• Money saved for the down payment
• Money saved for the closing costs
• Afford to pay other bills, power, electric, water, repairs and maintenance

Once you have found the home of your choice, next comes finding a home mortgage and payment terms that fit your budget. You might start by looking for a home mortgage at:

• The bank where you have your checking or savings account
• Savings and loan associations
• Commercial banks
• Mutual savings banks
• Mortgage companies

The mortgages these institutions offer will have varying features. One way to find the creditor with the most attractively priced loan is to look in your local newspaper, check to see if it publishes a shoppers guide to mortgage credit. These shoppers guides are available in many localities and can be used to identify the lenders with low rates. But, basically, the way to find the loan with the most attractive terms is to shop around.

Some lenders offer mortgage loans backed by a federal agency such as the Federal Housing Administration (FHA loans) or the Department of Veterans Affairs (VA loans). Insured mortgages may be more attractive than conventional mortgages in some ways, such as lower down payment requirements. But they may be more restrictive in other ways, for example, they may be available only for certain kinds of homes, or for properties whose value is below a specified price. Loans that are not government insured are called conventional mortgages.

Other Factors:

Other factors important to your mortgage decision are:

• The length of the loan and the down payment required by the lender. The longer the term and the larger the down payment, the smaller your monthly payments will be.
• The interest rate is important too, and in some cases the amount of the down payment will influence the interest rate that you pay (the larger the down payment, the lower the interest rate).
• In addition, mortgage loans may have:
  • Interest rates that will stay fixed for the life of the loan called fixed rate mortgages.
  • Interest rates that may change called adjustable rate mortgages (or ARMs), the initial rate of an ARM is generally lower than the rate available on a fixed rate mortgage, but remember, the rate may change during the lifetime of the loan.
  • A combination of fixed and adjustable interest rates called convertible mortgages.

Don't hesitate to ask the lender how one loan differs from another, how the different features of the loan will affect the mortgage, or whether your chances to qualify would improve if you made a higher down payment.

When you're shopping around, you will find that some home mortgage lenders have special programs to assist veterans and low income or the First Time Home Buyer. Ask the lender if such programs are available. Shop for the mortgage package that best meets your financial needs.

If you apply for a mortgage and the lender says you don't qualify, keep in mind that some lenders have stricter credit standards than others. Shop around for another lender. Don't stop shopping after one discouraging experience, or even several.

Also, lenders will examine your file, known as your * credit report, at the * credit bureaus, to learn if you pay your bills on time. A lender may reject your application if your credit report shows that you have a poor credit history. You may want to make sure your credit report is accurate before you apply for your mortgage. You have a right to know what information is contained in your credit report and to have someone from the credit bureau help you understand what the report says.

Federal Law

Federal law protects every homebuyer looking for a mortgage loan against discrimination on the basis of race, color, national origin, religion, sex, marital status, age, receipt of public assistance funds, familial status (having children under the age of 18), handicap, or exercising your rights under other consumer credit protection laws. Lenders may not take any of these factors into account in their dealings with you.

If the way you were treated by a lender suggests the possibility of unlawful discrimination, or you have questions about the treatment you have received, you can contact the local office nearest you at www.hud.gov/complaints/housediscrim.cfm

If after contacting the local office nearest you and you still have questions, you can contact:

United States Department of Housing and Urban Development
Office of Fair Housing and Equal Opportunity
451 7th Street, S.W., Room 5204, Washington, DC 20410-2000
Telephone: 202-708-0836 or 1-800-669-9777
Fax: 202-708-1425
TTY: 1-800-927-9275

For more information visist www.hud.gov/buying/

There are 9 Steps to Buying a Home, according to the United States Department of Housing and Urban Development (HUD).

Glossary For This Page
(In Alphabetical Order)

* Credit Bureaus
Credit Bureaus are companies that gather and sell the information in your credit report to creditors, employers, insurers, and other businesses to evaluate your applications for credit, insurance, employment, or renting a home. Also called consumer reporting agencies (CRAs). There are three major nationwide consumer reporting agencies (CRAs): Equifax, Experian, TransUnion. More about Credit Bureaus

* Credit Report
A document used by the credit industry to examine an individual's use of credit. It provides information on money that individuals have borrowed from credit institutions and a history of payments. More about your Credit Report

Federal Laws
Major laws that govern financial institutions and protect individuals in their financial dealings

Organizations

Consumer Info

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2004/2008

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